Addicted to Oil

[Kramer]

A good friend of mine who is a research fellow at the James Baker Institute at Rice University got a piece published..... Check it out and tell me what you think, he would be interested to know....

Feb. 4, 2006, 1:28AM
NO EASY WAY OUT
Are we really addicted to oil?
If president's analogy is correct, he didn't offer any real ways to curb it

By JOE BARNES and RONALD SOLIGO

In his State of the Union speech, President Bush likened American consumption of oil to an "addiction." The metaphor — one routinely trotted out by politicians of both parties — is a poor one.

Are Americans really "addicted" to oil? When we speak of addictions, we normally mean behaviors — smoking, drinking or drug use — that, because of biochemical dependency, make it extremely painful for the addict to quit. Does anyone really believe that buying a smaller vehicle instead of an SUV would be as difficult as quitting a two-pack-a-day cigarette addiction or kicking a long-term heroine habit? Rather than an addiction, American preference for large, heavy vehicles is actually a rational response to the fact that gasoline has historically been cheap and, despite recent price increases, remains so compared with prices in Europe and elsewhere. SUVs and other gas-guzzlers have characteristics that American consumers like, and if the vehicles aren't too expensive to operate, why not buy one rather than a more fuel-efficient car?

But let us for a moment assume that the president's metaphor is in fact accurate. As a nation, we've dealt with alcohol and tobacco addictions by placing taxes on their consumption. In the case of drugs, we have spent billions in law enforcements trying to reduce supply, the effect of which is to raise prices. In both cases, the idea is that people will consume less if prices are higher. In the case of illegal drugs, we also put users in jail — which is another "cost" to the consumption of those goods. The same rule would work with gasoline. The recent steep decline in SUV sales suggests that consumers are in fact responsive to gasoline prices. There's no doubt that Americans would kick their gas consumption "habit" if U.S. prices rose to European levels.

Yet the president made no mention of this obvious way to curb our "addiction." There was no talk of higher gasoline taxes or tougher standards that would force manufacturers to build more fuel-efficient vehicles. How does the president think we can end our addiction if no one takes away the punch bowl — to use a metaphor often applied to a restrictive monetary policy? The answer — to judge from the president's proposals — is to subsidize research on new automobile technologies and fuels. But these alone will do little to reduce our gasoline consumption. After all, gas-electric hybrid technology is already available; ethanol as an alternative fuel has been around for decades. The problem is that these are both expensive relative to their conventional alternatives: the internal combustion engine and gasoline. Consumers will change their buying habits only when it is cost-efficient to do so. If we increased gas taxes or fuel-efficiency standards, automobile producers would have a strong incentive to quickly innovate and produce more efficient cars. And consumers would have an incentive to buy them.

Another of the president's stated objectives — to reduce consumption of Middle East oil by 75 percent by 2025 — also lacks follow-through. Why wait two decades? In fact, the president's target could be achieved very quickly. The Middle East produces roughly 30 percent of the world's petroleum. That leaves 70 percent produced elsewhere. If we prohibited oil imports from the Middle East, petroleum from other regions would automatically be diverted to the U.S. market and we would be free of Middle East oil! That's how markets work. To be sure, we might have to pay a premium to bid non-Middle East oil away from other consumers, but the point is that the president's goal is achievable today.

Of course, the prices Americans would pay at the pump would still be determined in large part by production in the Middle East. This is why the administration quickly backed off from its pledge to reduce Middle East imports. Today's petroleum markets are truly global. Unless we completely isolate our domestic market from the world, we will continue to be susceptible to price shocks no matter how much of our oil is imported from the Middle East or, for that matter, anywhere else. Again, that's how markets work.

We applaud the president's calling attention to the need to curtail our national oil consumption. After all, Americans, with 5 percent of the world's population, consume 25 percent of the world's oil output. Given our huge share of the market, there's no doubt that if we consumed less, prices would fall or at least rise less quickly. But the president's suggestions will have little impact on curing U.S. dependence on oil, whether that dependence is an "addiction" or merely a rational response to prices. The ugly truth — one that the president's State of the Union message conspicuously avoided — is that there is no easy solution to our dependence on oil. Or to use another metaphor: No pain, no gain.

Barnes is Research Fellow at Rice University's James A Baker III Institute for Public Policy, and Soligo is Professor of Economics at Rice University

[Yamori]

Wow, that was utterly stupid. It makes it more sad that this would actually be published, and that the author has a position in academia and is not some dopey blogger.

He runs off with a single use of phrase (addicted) - from someone as sloppy with word use as the president - and makes it the entire foundation of his argument.

What makes a limited resource that the country's economy utterly depends on at all related to consumable items in limitless supply used as personal hobbies? Blank out.

What right does the government have to radically raise prices for private businesses without their consent - effectively crippling them by removing most of their customer base? Blank out.

What happens if alternative fuel sources prove to be too difficult to produce cost efficiently for a decade more? Blank out.

What happens to all but the rich if gas becomes expensive and there are no directly available cost effective alternatives? Blank out.

Bar trade with middle eastern oil? What happens in the future when other sources of oil are used up and the only source left is the openly hostile middle east? Blank out.

What would be the diplomatic response to barring trade on the chief export of an entire area of the world without just cause? Would this help our problems of wanting to be rid of our oil 'addiction' in the first place (troublesome middle eastern relations)? Blank out.

The author criticizes bush for offering no actual solutions - yet he offers none of his own. Raise oil prices so American consumers will not be able to afford it. What alternative will they use to get themselves to work, heat their homes if they cannot afford it thanks to artificial price inflation? What benefit comes from raising prices of neccessary resources with no feasible alternative? Blank out.

This is obviously a very liberal leaning piece, yet it's blatantly obvious these ideas would create widespread suffering and incredible economic hardship for the poor above all else. People not able to afford artificially inflated gas prices and unable to find public transport would lose their jobs. Bus fare would cost more money.

Overall, he focuses solely on 'curing' the oil addiction while being completely oblivious to the basic premise of why oil addiction is a dangerous thing. In essence it turns into a call for the government to vindictively punish American citizens for their spending habbits while proposing little to actually address the basic problem of oil (Being, it is necessary. It is increasingly rare. A large portion of it comes from hostile nations. There are currently no directly available cost effective replacements to be used on a large scale).

I'm not trying to be mean here, just honest - and as previously mentioned, pieces put into publication by people in academic positions inherently deserve and require far more criticism than some blogger's personal musings.

[Harrison]

Bar trade with middle eastern oil? What happens in the future when other sources of oil are used up and the only source left is the openly hostile middle east? Blank out.

We steamroll the motherfuckers and take what we want. Just like it's always been done since the dawn of mankind...

[Kitao]

I agree with Harrison.

[Sorina S]

I agree with Yamori, the piece is long on rhetoric and short on insight. Reducing dependancy on fossil fuels is far more involved than your friend makes it to be. Raising prices, be it through tax or lessing supply would cripple our economy. It's a process that's moving forward though, finally.

As far as GW's remarks in the State of the Union, well it sounded to me like a page ripped from the Mother Earth News circa 1974. I'll belive it when I see the funding.

SS~

[Captain Insano]

A good friend of mine who is a research fellow at the James Baker Institute at Rice University got a piece published..... Check it out and tell me what you think, he would be interested to know....

Feb. 4, 2006, 1:28AM
NO EASY WAY OUT
Are we really addicted to oil?
If president's analogy is correct, he didn't offer any real ways to curb it

By JOE BARNES and RONALD SOLIGO

In his State of the Union speech, President Bush likened American consumption of oil to an "addiction." The metaphor — one routinely trotted out by politicians of both parties — is a poor one.

Are Americans really "addicted" to oil? When we speak of addictions, we normally mean behaviors — smoking, drinking or drug use — that, because of biochemical dependency, make it extremely painful for the addict to quit. Does anyone really believe that buying a smaller vehicle instead of an SUV would be as difficult as quitting a two-pack-a-day cigarette addiction or kicking a long-term heroine habit? Rather than an addiction, American preference for large, heavy vehicles is actually a rational response to the fact that gasoline has historically been cheap and, despite recent price increases, remains so compared with prices in Europe and elsewhere. SUVs and other gas-guzzlers have characteristics that American consumers like, and if the vehicles aren't too expensive to operate, why not buy one rather than a more fuel-efficient car?

But let us for a moment assume that the president's metaphor is in fact accurate. As a nation, we've dealt with alcohol and tobacco addictions by placing taxes on their consumption. In the case of drugs, we have spent billions in law enforcements trying to reduce supply, the effect of which is to raise prices. In both cases, the idea is that people will consume less if prices are higher. In the case of illegal drugs, we also put users in jail — which is another "cost" to the consumption of those goods. The same rule would work with gasoline. The recent steep decline in SUV sales suggests that consumers are in fact responsive to gasoline prices. There's no doubt that Americans would kick their gas consumption "habit" if U.S. prices rose to European levels.

Yet the president made no mention of this obvious way to curb our "addiction." There was no talk of higher gasoline taxes or tougher standards that would force manufacturers to build more fuel-efficient vehicles. How does the president think we can end our addiction if no one takes away the punch bowl — to use a metaphor often applied to a restrictive monetary policy? The answer — to judge from the president's proposals — is to subsidize research on new automobile technologies and fuels. But these alone will do little to reduce our gasoline consumption. After all, gas-electric hybrid technology is already available; ethanol as an alternative fuel has been around for decades. The problem is that these are both expensive relative to their conventional alternatives: the internal combustion engine and gasoline. Consumers will change their buying habits only when it is cost-efficient to do so. If we increased gas taxes or fuel-efficiency standards, automobile producers would have a strong incentive to quickly innovate and produce more efficient cars. And consumers would have an incentive to buy them.

Another of the president's stated objectives — to reduce consumption of Middle East oil by 75 percent by 2025 — also lacks follow-through. Why wait two decades? In fact, the president's target could be achieved very quickly. The Middle East produces roughly 30 percent of the world's petroleum. That leaves 70 percent produced elsewhere. If we prohibited oil imports from the Middle East, petroleum from other regions would automatically be diverted to the U.S. market and we would be free of Middle East oil! That's how markets work. To be sure, we might have to pay a premium to bid non-Middle East oil away from other consumers, but the point is that the president's goal is achievable today.

Of course, the prices Americans would pay at the pump would still be determined in large part by production in the Middle East. This is why the administration quickly backed off from its pledge to reduce Middle East imports. Today's petroleum markets are truly global. Unless we completely isolate our domestic market from the world, we will continue to be susceptible to price shocks no matter how much of our oil is imported from the Middle East or, for that matter, anywhere else. Again, that's how markets work.

We applaud the president's calling attention to the need to curtail our national oil consumption. After all, Americans, with 5 percent of the world's population, consume 25 percent of the world's oil output. Given our huge share of the market, there's no doubt that if we consumed less, prices would fall or at least rise less quickly. But the president's suggestions will have little impact on curing U.S. dependence on oil, whether that dependence is an "addiction" or merely a rational response to prices. The ugly truth — one that the president's State of the Union message conspicuously avoided — is that there is no easy solution to our dependence on oil. Or to use another metaphor: No pain, no gain.

Barnes is Research Fellow at Rice University's James A Baker III Institute for Public Policy, and Soligo is Professor of Economics at Rice University

This is one of the stupidest things I have ever read. I am at the point of losing all respect for just about anyone who is college educated en masse.

If this retard's plan were actually enacted he would single handedly destroy the welfare of every single poor through middle class citizen in the country and accomplish NOTHING in the process.

Here is a much better idea:

Allow the oil companies to drill anywhere they need to on our territory as long as they can keep environmental impact below a certain threshold. The oil they find and keep and sell should have to offset a certain amount of imports from middle eastern and foreign countries. Lets say for every extra 100 barrels they find here they have to decrese imports by 60.

Provide MAJOR tax breaks for any company designing fuel efficient devices/heating equipment/cars etc.

When I say major tax breaks I was thinking somewhere along the lines of then not having to pay taxes on any car they selling that manages to get say 75 miles to the gallon or better on gas or runs on 80 percent alternative fuels.

Next I would say to all the consumers that they don't have to pay tax on any car meeting certain fuel standards or possibly that they don't have to pay registration for the first 5 years they own the car.


My ideas are way better than that smart guy. My last idea is to find that guy and give him the people's elbow while I urinate on his face.

[Yamori]

Yeah, along those lines, my solution would be as follows: (granted it is more of a retrospective thing, but it can still be done on a smaller scale, to the tune of a couple billion dollars).

Take 1/10th of all the money that had been spent on Iraq and instead offer it as a cash prize to any individual or company that creates a safe, affordable, highly efficient alternative to gas-driven cars.

Offer another 1/10th as a cash prize to anyone who creates a safe, affordable, and highly efficient alternative to oil heating.

BOOM, the only thing the middle east is good for is selling us oil that we use for outdated cars that will gradually phase out, and to make vasoline :P. We stop giving a shit about them, they have less animosity towards us because we won't have army bases in their countries and don't interfere with their stupid barbaric theocratic politics, and everyone lives happily ever after, the end.

Seriously, 100 billion dollars (I think that's roughly 1/10th of Iraq expendatures, no?) would get so many innovators off their asses and working like psychos - we could begin solving the problem within a year I'd wager.

[Harrison]

Yeah, along those lines, my solution would be as follows: (granted it is more of a retrospective thing, but it can still be done on a smaller scale, to the tune of a couple billion dollars).

Take 1/10th of all the money that had been spent on Iraq and instead offer it as a cash prize to any individual or company that creates a safe, affordable, highly efficient alternative to gas-driven cars.

Offer another 1/10th as a cash prize to anyone who creates a safe, affordable, and highly efficient alternative to oil heating.

BOOM, the only thing the middle east is good for is selling us oil that we use for outdated cars that will gradually phase out, and to make vasoline :P. We stop giving a shit about them, they have less animosity towards us because we won't have army bases in their countries and don't interfere with their stupid barbaric theocratic politics, and everyone lives happily ever after, the end.

Seriously, 100 billion dollars (I think that's roughly 1/10th of Iraq expendatures, no?) would get so many innovators off their asses and working like psychos - we could begin solving the problem within a year I'd wager.

The only thing there that does speak truth is the "BOOM" part.

That's what it's going to take to quiet those motherfuckers who have been killing eachother for thousands of years nonstop.